There are Two Side to Every Coin
The sad truth for Sir Jim Ratcliffe and the fans right now, is that Manchester United is extremely close to breaching financial fair play laws. Both with UEFA and with The FA. So much so that tens of thousands of dollars matter. So much so that a club which prides itself on moral values is forced to choose between the employees whose livelihoods depend on them, and the sheer survival of Manchester United.
It sounds all sounds a bit cold and callice. Mainly because it isn’t the fault of the people losing their jobs or their benefits, that United are in this much financial trouble. And it’s not the fault of the fans who have to pay more for tickets either. Yet they are the one’s paying for the club’s mistakes.
However, from a business perspective, from the perspective of the survival of Manchester United, it also should be said that it isn’t the club’s job to placate those people or public opinion by continuing down the path the Glazers set and financially running the club into the ground.
Sir Jim Ratcliffe and his team have had less than a year to fix what the Glazers took 12 years to destroy. His methods are rash, but they are exactly the kind of business decisions executives like Ratcliffe, Berrada and Wilcox have to make to keep the club from sinking.
…Or worse, preventing the club from having to sit next in line to Manchester City at the Court of Sport Arbitration.
Reducing Operating Cost
Despite the layoffs and cutbacks at United, they still have one of largest operating staffs in British football. They also boast one of the highest operating budgets in professional sports.
However, the fact that Manchester United are not playing in the Champions League is severely hurting the clubs finances. They are losing hundreds of millions of dollars in merchandise revenue, TV money, sponsorship bonuses, even tax cuts, by not playing at the level they should be at.
United is already more than a billion dollars in debt. Not mention this summer they have to pay out more than $100 million in interest payments on that debt, annual bonuses to players, payouts to Dan Ashworth and Erik ten Hag, and payments due to other clubs for players we purchased on an amortised deal.
Simply put, Sir Jim Ratcliffe insists that the club needs to bring operating costs and staff down to a more sustainable level. And he isn’t wrong. Manchester United’s books are public information. The club is a loud sneeze away from collapse.
Ratcliffe mentioned several times in his recent interviews that Manchester United would have run out of money by November had they not made these decisions. That also means the paltry amount of money United are saving with their cutbacks and layoffs will only float the club for a short time. United need drastic measures just to keep the lights on.
Let alone build a team than can win the Premier and Champions Leagues.
Increasing Revenue
In an attempt to re-garnish support from the fans, Sir Jim Ratcliffe has now revealed a plan to build a new world class stadium. The development will be apart of the City of Manchester Council’s attempt to revitalize the industrialized area around the current grounds.
It will include a state of the art,100,000 seat stadium. Which will be 100% solar powered and able to harvest enough rain water to supply fresh water to the whole park and maintain the pitch. The plans also include a new museum and fan park just outside the stadium. And just adjacent to ‘New Trafford’ they plan to build a hotel, luxury flats, and a shopping center.
The hope for Ratcliffe and Co. is that this regeneration project will dramatically increase revenue. The increase in the stadium size alone will see a 25% boost in revenue from ticket sales. Not to mention the tens of millions per year in passive income the club will make by owning the land and properties being built around the stadium.
The project also makes it easier for fans who don’t live in Manchester to attend matches. It creates a venue that will attract a higher caliber player to the club. And it opens the stadium up to hosting more events like concerts, World Cup matches, NFL matches and so on… The rumors are, Ratcliffe and the City of Manchester believe the development could end up attracting billions of dollars in tourism to the city.
Layoffs, penny pinching, selling our best players and building a new stadium. All of these things put money in the bank. That money becomes vital when complying with financial fair play as well as the rebuild Amorim has been promised.
Sir Jim Ratcliff Pledges to Reinvest
Sir Jim Ratcliffe also made the point that the club can reinvest into more staff, charitable contributions and better benefits with time. As the team’s performances improve so will the club’s revenue and their ability to reinvest.
Ratcliffe has already identified several departments he intends to improve internally at the club. His short list includes player recruitment and scouting, player analytics, as well as the sports medicine and physio departments.
Most importantly, he has reiterated that Manchester United need to raise funds for the players they have promised Ruben Amorim they would chase. The United minority owner was not shy in saying the he and his staff are very aware of the investment needed into the squad. He has also said that they fully intend to provide Amorim with that support.
However, when your club is nine months away from bankruptcy, the flip side to that coin is that Ratcliffe and his team need to be very clever with where they get the money for new players. They need to scrape and scrounge everywhere they can.
A great example is one that Alex and John gave on the ARD pod recently. The way that financial fair play works, if United were to sell, say, Alejandro Garnacho for $60 million this summer…They could theoretically spend up to $150 million in the summer window. That could supply three $50 million dollar players.
This is possible because most deals now a days are amortized. So Untied might owe $150 for those three players, but they might only pay $20 million each up front. Meaning they are still spending within their means. All because of a single player sale.
A Little More Perspective
I think most fans would agree that if we were to prioritize what position needs filling most, it is probably striker.
I also hear a lot of good arguments for replacing our keepers, bringing in a new center back more suited for a back three, brining in new wing back, and a left sided attacker. There are also a lot people concerned because Casemiro and Eriksen are likely out the door this summer, and Mount’s injury record is terrible. Meaning that our midfield may be dangerously thin without a new recruit.
Evans and Heaton will be retiring. Eriksen and Lindelof have expiring contracts that don’t appear to be getting renewed. Rashford, Casemiro, Antony, Sancho, Bayindir, Onana, Malacia, Shaw, Dalot, and Garnacho have all been deemed surplus to requirements by Amorim. Fans remain skeptical about Mount, Maguire, Zirkzee and Hojlund. And now apparently Real Madrid have a hard-on for Bruno Fernandes.
While I doubt that much turn over in one summer is possible given United’s FFP restrictions, that is a lot of potential for change.
What’s more, given the market value for most of the players Amorim wants United to recruit, as well as the players we need to get rid of, United won’t make enough on player sales alone to fund a rebuild. Most of the players we want to sell aren’t worth the paper their contracts are printed on. Hence selling players like Garnacho.
The Glazers are Still the Problem
Honestly, as terrible as things have been the last two seasons in particular, are these not the dramatic changes fans have been asking for? I don’t think any fan wanted to see people lose their jobs over our malcontent. But for years we have been calling for significant changes to the way the club is run to only be served more of the same mediocrity.
Now, because of the Glazers, the club is no longer in a position to flex it’s financial muscles. Mainly because of the atrophy caused by their commercial prioritization of Manchester United. The Glazers should know by now, success on the pitch buys financial and commercial success. Very rarely is the opposite true.
The Glazers have been criticized for more than a decade for creating a financially unsustainable model at Old Trafford. We all foreshadowed the crash the club would suffer if they continued in the same direction.
Yet now that crash has arrived, people’s knee jerk reaction is to call out the new regime, after only a year in charge, for making the same tough decisions that fans had foreshadowed before Ratcliffe even bought into the club?! While at the same time paying little attention to how deep the hole is that the Glazers tossed Ratcliffe into and how small the shovel is that they gave him to dig the club out with?!… The hypocrisy is not becoming of a Manchester United fan.
Maybe, we do need to rip off the bandaid. Maybe, for the sake of the survival of our club we need to embrace a new way.
Credit Where Credit is Due to Sir Jim Ratcliffe
Under Ratcliffe, we as fans have been given a lot of what we asked for. A new stadium and training ground is going to be built. If rumors are correct, the price of the new grounds will be subsidised and financed by the city rather than leveraged against the club. This increases revenue without the subsequent debt inflation that comes with paying for a multi-billion dollar development.
The club made smart loan deals for players like Rashford, Sancho and Antony where their host club is paying at least 75% of the player wages. Rashy and Sancho also have obligation to buy clauses should certain criteria be met. These deals relieve United from financial stress and the squad of negative influences. They also place a higher degree of likelihood on being able to off load those players once their loans expire.
Additionally, Ratcliffe and the United front office deserve credit for being uncompromising in hiring an elite next-gen coach. As well as hiring experienced footballing executives to the front office. Credit also goes to the new United owner and executive team for being proactive and supportive of Ruben Amorim when it come to his decisions regarding player selection and discipline.
The truth is, Sir Jim Ratcliffe has done more good for the club in the last year than the Glazers have done in the last ten. It is hard to believe given the high profile errors his team has made along the way. But there is no denying that Ratcliffe is slowly trying to chip away at all of the things that need fixing at United.
A Brief Philosophical Digression
There is a story that many of us are familiar with. As overplayed as it is, it has always stuck with me for its truth.
A man walking along suddenly falls down a hole that is too deep to climb out of. Realizing he is trapped, the man begins to shout for help.
Soon, a doctor walks by and sees the man in the hole. The man shouts up to the doctor, ‘hey up there, can you help me?’. The doctor writes a prescription, throws it down the hole and moves on.
The man continues to shout for help. Soon a priest walks by. Again, the man shouts up, ‘hey you, hey up there, can you help me?’. The priest writes down a prayer for the man, throws it down the hole and moves on.
Then a policeman walks by. The man feeling relieved, shouts up to the officer, “Officer, could you please help me out of this hole?’. The policeman writes the man a ticket, tosses it down the hole and moves on.
The man, still trapped, shouts for help again. Soon he sees a friend walk by and shouts up, ‘hey pal, can you please help me?’. So, the friend jumps into the hole. The man looks at his friend and yells at him, ‘you idiot, now we are both trapped down here!’ The friend then turns to the man and replies, ‘yeah, but I’ve been down in this hole before and I know the way out.’
The fans, Ratcliffe, the club, Amorim…we all knew how deep the hole at Manchester United was before INEOS arrived. What we don’t know is whether Sir Jim Ratcliffe and the team he brought in are the doctor, the priest, the cop or the friend.
Glory, Glory, Man United!
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